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7/31/2019 U.S. Oil Production Potential from Accelerated Deployment of Carbon Capture and Storage (ARI, March 2010)
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U.S. OIL PRODUCTION POTENTIAL FROM
ACCELERATED DEPLOYMENT OF CARBONCAPTURE AND STORAGE
White Paper
Advanced Resources International, Inc.Arlington, VA USA
March 10, 2010
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This report was prepared for the Natural Resources Defense Council.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY ...............................................................................................................................................
BACKGROUND AND OBJECTIVE..............................................................................................................................
CURRENT CO2-EOR ACTIVITY....................................................................................................................................6 POTENTIAL DOMESTIC OIL RESOURCES FROM CO2-EOR.....................................................................................8
DISTRIBUTION OF ECONOMIC CO2-EOR PROSPECTS .........................................................................................13
LIMITS TO AND PLANNED EXPANSION OF CO2-EOR IN THE U.S.........................................................................15
POTENTIAL FOR CCS AND CO2-EOR BY INDUSTRIAL EMISSIONS SOURCES ...................................................1
FORECASTS OF POWER SECTOR CCS DEPLOYMENT FROM IMPLEMENTATION OF ACES .....................
NATIONAL FORECASTS OF OIL PRODUCTION FROM CO2-EOR RESULTING FROM PROJECTED CCSDEPLOYMENT UNDER ACES....................................................................................................................................2
REGIONAL DISTRIBUTION IMPACTS OF CCS DEPLOYMENT OF CO2-EOR POTENTIAL....................................31
CONNECTING CO2 SUPPLY WITH EOR DEMAND...................................................................................................37
ECONOMIC BENEFITS OF INCREASED DOMESTIC OIL PRODUCTION ..........................................................
ENVIRONMENTAL BENEFITS OF INCREASED DOMESTIC OIL PRODUCTION WITH CO2-EOR .........................47
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LIST OF FIGURES
Figure ES-1. Possible Way That U.S. CO2 Capture/Transport/And Storage Could Evolve .......................... 3
Figure 1. Major CO2-EOR Activity in the U.S.............................................................................................
Figure 2. Distribution of Oil Production Potential by Field Size .................................................................
Figure 3. CO2 Supply and Demand in the Permian Basin...........................................................................1
Figure 4. U.S Gulf Coast Potential Anthropogenic Sources of CO2 ............................................................17
Figure 5. Denbury Resources Strategic Vision for Moving Midwest CO2 Supplies to the U.S. Gulf CoastCO2-EOR Market.........................................................................................................................................
Figure 6. Carbon Dioxide Captured from Electricity Generation Technologies with CCS in 2020 and 203....................................................................................................................................................................23
Figure 7. Comparison of Potential Oil Production from CO2-EOR due to CCS Deployment to 2008 U.SProduction and Imports................................................................................................................................
Figure 8. Growth of CO2-EOR Production in the U.S. (1986-2008)..........................................................
Figure 9. NEMS Electricity Market Model Supply Regions .......................................................................
Figure 10. NEMS Electricity Market Regions and Major Oil Basins with CO2-EOR Potential.................
Figure 11. Possible Way That U.S. CO2 Capture/Transport/And Storage Could Evolve ............................37
Figure 12. Schematic Illustration of Coupling CO2-EOR with Other Strategies to Maximize Cost-EffectiveCO2 Storage ................................................................................................................................................ 4
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LIST OF TABLES
Table 1. Volumes of CO2 Supplying EOR Projects in 2008 ...........................................................................7
Table 2. Economically Recoverable Domestic Oil Resources from CO2-EOR* ...........................................11
Table 3. Economically Feasible Market for CO2 for Next Generation CO2-EOR*......................................12
Table 4. Cumulative Probability Distribution for Onshore Economic CO2-EOR Prospects ..........................14
Table 5. Comparison of Forecasts of CCS Deployment and Associated Benefits due to ACES .................
Table 6. NEMS Forecasted Deployment of Power Generation Capacity with CCS....................................
Table 7. Estimates of Captured CO2 Associated with Power Generation Capacity with CCS .....................34
Table 8. Estimates of Maximum Oil Production Potential from CO2-EOR Utilizing Captured CO2 Associatedwith Power Generation Capacity with CCS.................................................................................................
Table 9. Tabulation of Possible Movement of CO2 from CCS Deployment from Electricity Market SupplyRegions to Oil Regions................................................................................................................................
Table 10. Tabulation of Possible Movement of CO2 from CCS Deployment to Oil Regions from ElectricityMarket Supply Regions...............................................................................................................................
Table 11. Estimated Distribution of Economic Value of Incremental Oil Production from CO2-EOR by 2030....................................................................................................................................................................43
Table 12. Estimated Distribution of Economic Value of Incremental Oil Production from CO2-EOR by 2030....................................................................................................................................................................44
Table 13. Estimated Economic Impacts of Oil Production from CO2-EOR Utilizing Captured CO2 Associated with Power Generation Capacity with CCS ..............................................................................
Table 14. Estimated Economic Impacts of Oil Production from CO2-EOR Utilizing Captured CO2
Associated with Power Generation Capacity with CCS ..............................................................................
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EXECUTIVE SUMMARY
Key features of climate legislation being considered by the U.S. Congress, such as the American
Clean Energy and Security Act (ACES) (H.R. 2454), are designed to stimulate and support rapid
deployment of carbon capture and storage (CCS) in power generation and other industrial facilities that
emit significant volumes of carbon dioxide (CO 2). In addition to reducing emissions, the captured CO 2
could be productively used to produce more domestic oil through the application of CO 2-enhanced oil
recovery (CO 2-EOR) technology. Increasing domestic oil production will result in lower crude oil
imports, enhanced domestic energy security, and significant economic and environmental benefits.
Specifically, the implementation of ACES could result in:
By 2020, application of CCS technology in 13 to 14 gigawatts (GW) of coal powergeneration capacity, capturing 78 to 85 million metric tons (tonnes) of CO 2 per year
(about 4 billion cubic feet per day (Bcfd)).
By 2030, 69 to 109 GW of new coal and natural gas-fired power generation capacityequipped with CCS technology, reducing annual CO 2 emissions by 410 to 530 million
tonnes in 2030.
The productive use of this captured CO 2 for EOR could increase domestic oil productionby 3.0 to 3.6 million barrels per day by 2030, assuming all of the captured CO 2 is
preferentially used for EOR .1 Cumulatively, from 12% to 19% of the economically
recoverable CO 2-EOR potential in the Lower-48 would be produced by 2030. 2 The
reduction of oil imports that could result from this increased domestic production would
represent 33-40% of net crude oil imports in 2009 and 43-52% of net crude oil imports
projected in 2030. 3
The cumulative reduction in oil imports that could result between now and year 2030would improve the trade balance by nearly $700 billion, resulting in increased state and
Federal revenues of $190 to $210 billion.
1 This is not necessarily what is expected to take place as a result of the ACES.2 U.S. Department of Energy, National Energy Technology Laboratory, Storing CO 2 with Enhanced Oil Recovery , February 2008 (see Reference 4)3 Energy Information Administration, Annual Energy Outlook , April 2009.
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National Energy Market Model (NEMS) runs by the Natural Resources Defense Council (NRDC) and
the Energy Information Administration (EIA) of the impacts of implementing ACES provide the
foundation for the projected deployment of CCS-equipped power plants assumed in our study. In
addition, NRDC modeled CCS deployment and CO 2-EOR production at the aggregate national level in
MARKAL (acronym for MARKet ALlocation). The widespread deployment of CCS-equipped powerplants and large supplies of captured CO 2 emissions would result in significantly lower CO 2 costs than
assessed in previous reports on CO 2-EOR potential and enable the widespread and rapid expansion of
CO2-EOR production. 3,4
Productively using CO 2 to enhance oil recovery is neither a new nor an exotic technology. Today, 105
CO2-EOR projects provide over 250,000 barrels per day of incremental oil production in the U.S. Since
1986, about 1.5 billion barrels of domestic oil have been using CO 2-EOR, with another 1 billion barrels
currently booked as proven reserves. However, the single largest deterrent to expanding production
from CO 2-EOR today is the lack of large volumes of reliable and affordable CO 2. Most of the CO 2 used
for EOR today comes from natural CO 2 reservoirs, which are limited in capacity. Thus, an attractive
market exists for CO 2 emissions captured from industrial sources and power plants for expanding
domestic oil production through the application of CO 2-EOR.
In the near-term, lower cost, high-purity CO 2 captured from the host of smaller industrial (non-power)
sources would kick start the field pilots, demonstrate CO 2-EOR in new oil fields, and accelerate early
CO2-EOR market growth in underdeveloped oil basins. Captured CO 2 from power plants would
provide the subsequent large volumes of CO 2 needed to scale up CO 2-EOR in these basins.
The captured CO 2 need not be adjacent to or near oil fields amenable to CO 2-EOR for this option to be
economically viable. The vast majority of power plants projected to be equipped with CCS would be
within 700 miles of oil basins with significant CO 2-EOR potential. This distance is comparable to
existing and planned CO 2 pipelines, of which more than 3,500 miles exist today in the U.S. In fact, in
this white paper, as shown in Figure ES-1, which illustrates just one of the many possible ways a CO 2
capture, transport and storage industry could evolve by 2030 in response to these regional imbalances
and efficiently allow for captured volumes of CO 2 from CCS to be utilized to take advantage of CO 2-EOR opportunities. As shown, the transport network necessary to serve a CCS-oriented marketplace
would be much less complicated than the current network utilized for natural gas.
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Figure ES-1. Possible Way That U.S. CO2 Capture/Transport/And Storage Could Evolve
The bulk of U.S. oil fields are amenable to CO 2-EOR. Application of todays best practices 4 CO 2-
EOR technology to these oil fields could enable 85 billion barrels to become technically recoverable
(over 72 billion barrels in the Lower 48). At an oil price of $70 per barrel and delivered CO 2 costs of
$15 per metric ton, 48 billion barrels would be economically recoverable (over 38 billion barrels in
the Lower 48), providing a large volume market for captured CO 2.
4 Best practices in this assessment, assumes State-of-the-Art technology characteristics used inprevious DOE/NETL studies. These represent the practices used by the most sophisticated operatorstoday. (See discussion in the text of this report, as well as Reference 4)
4
5
1
2
3
13
6
7
8
11
9
10
12
NEMS Electricity Market Model Supply Regions
JAF02059.CDR
Major Oil Basins with CO2-EOR Potential in the Lower 48
Potential Inter-Regional Pipeline Corridors
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Importantly, the use of next generation 5 CO 2-EOR technology would make 119 billion barrels
technically recoverable (106 billion barrels in the Lower 48), with 66 billion barrels economic at $70
per barrel oil and $15 per metric ton CO 2 (57 billion barrels in the Lower 48).
The nations oil reservoirs amenable to CO 2-EOR are more than adequate to make use of theprojected supplies of captured CO 2 emissions to support increased domestic oil production of 3.0 to
3.6 million barrels per day, and to provide a high volume market for captured CO 2 emissions well past
the year 2030. Higher production rates could be achieved with additional CO2 supplies from industrial
(non power) sources, which will also be incentivized under proposed emission limits and CCS
incentives.
Technically and Economically Recoverable Domestic Oil Resources from CO2-EOR*
Incremental TechnicallyRecoverable Oil*(Billion Barrels)
Incremental EconomicallyRecoverable Oil** (BillionBarrels)
RegionBest
PracticesNext
GenerationBest
PracticesNext
Generation
Lower 48 72.4 106.3 38.5 56.5
TOTAL 84.8 118.7 48.0 66.0*Incremental technically recoverable oil resources after subtracting 2.3 billion barrels already being developed with CO2-EOR.**Assumes an oil price of $70 per barrel (constant, real) and a CO2 cost of $15 per metric ton ($0.79/Mcf), delivered at pressure to the field.
5 Next Generation in this assessment, assumes technology characteristics used in previous DOE/NETLstudies. Specifically, it assumes: ((1) Increasing the volume of CO 2 injected into the oil reservoir; (2)optimizing well design and placement, including adding infill wells, to achieve increased contact betweenthe injected CO 2 and the oil reservoir; (3) improving the mobility ratio between the injected CO 2 /water andthe residual oil; and, (4) extending the miscibility range, thus helping more reservoirs achieve higher oilrecovery efficiency.(See discussion in the text of this report, as well as Reference 3).
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BACKGROUND AND OBJECTIVE
Implementation of the American Clean Energy and Security Act (ACES), or H.R. 2454, which was
passed by the U.S. House of Representatives in 2009 (the Waxman-Markey bill), or similar
legislation, would result in rapid deployment of carbon capture and storage (CCS) by new power
generation and industrial facilities through the bills extensive incentives for the technology. 6 As of the
publication of this report, additional incentives are being considered by the U.S. Senate to further
encourage CCS from both power generation facilities (including gas-fired facilities) and other industrial
sources.
It has been alleged that requiring CCS for new power generation capacity would impose severe
economic hardships on consumers and the nations economy. In fact, this report demonstrates that
CCS can provide both significant environmental and economic benefits; especially if value-addedopportunities for productively using captured carbon dioxide (CO 2) are encouraged and pursued. In
addition, large-scale CCS deployment could lead to significant increases in energy security. The
captured CO 2, if stored in depleted oil fields with CO 2 enhanced oil recovery (CO 2-EOR) technologies,
could result in significant increases in domestic oil production, with commensurate reductions in oil
imports. Specifically, combining CO 2 storage with CO 2-EOR can help produce more oil from mature,
already-developed oil fields in the U.S., while sequestering large quantities of CO 2, rather than emitting
this greenhouse gas (GHG) to the atmosphere.
As such, CO 2-EOR can provide a bridge to a low-carbon energy future involving widespread market
penetration of CCS technology. Revenues from CO 2 sales to the oil industry can offset some of the
costs of CO 2 capture from both natural gas- and coal-fired power plants, as well as other industrial
facilities producing large volumes of CO 2. In addition, CO 2-EOR can facilitate the construction of CO 2
pipelines and other infrastructure for transporting and storing CO 2 into other types of subsurface
formations as well. Finally, the support provided by CO 2-EOR for early implementation of CCS will
help drive down the costs of capture, the largest cost hurdle for CCS, through learning by doing.
While previous reports by the U.S. Department of Energy (DOE), National Energy TechnologyLaboratory (NETL) have reported estimates of the overall national oil supply potential from CO 2-EOR,
estimates of potential future oil production as a function of forecast deployment of CCS have not been
6 Section 115 of the legislation contains an incentive program for CCS deployment subsidies that areestimated to amount to $150-200 billion, incentivizing up to 72 gigawatts equivalent of power generationand industrial capacity.
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previously published. Recent work by the Natural Resources Defense Council (NRDC) and the Energy
Information Administration (EIA) to assess the potential energy and economic impacts of implementing
ACES provides projections of CCS deployment. Based on these projections, potential volumes of
captured CO 2 emissions that would need to be stored, assuming all CO 2 captured from CCS
deployment is used for CO 2-EOR, can be estimated. These projections of stored CO 2 emissions thusprovide the essential link between available CO 2 supplies from captured anthropogenic sources and
the projection of future oil production from the domestic application of CO 2-EOR.
Therefore, the objective of this study is to estimate the oil production potential from CO 2-EOR, over
time, as a function of forecast CCS deployment, and characterize some of the economic and
environmental benefits that could result from this increased domestic oil production for the nation as a
whole and for specific regions.
CURRENT CO 2-EOR ACTIVITY
The process of injecting CO 2 to enhance the recovery of oil is not new or exotic. CO 2-EOR
technologies have been demonstrated at commercial scale for over 30 years in the Permian Basin of
West Texas and Eastern New Mexico. Today, 105 CO 2-EOR projects provide nearly 250,000 barrels
per day of incremental oil production in the U.S. (Figure 1). Since 1986, over 1.3 billion barrels of
incremental oil has been recovered using this technology, with another 1 billion barrels remaining as
proven reserves. 1 The technically and economically recoverable oil from CO 2-EOR, however, is orders
of magnitude higher, as is documented in this report.
These current CO 2-EOR projects are, for the most part, injecting CO 2 sourced from natural CO 2
reservoirs; sources of CO 2 that are high in purity and accessible at relatively low cost. Over 80% of the
CO2 used for CO 2-EOR projects in the U.S. in 2008 came from four large natural CO 2 fields Jackson
Dome, Sheep Mountain, McElmo Dome, and Bravo Dome. The rest of the CO 2 used for CO 2-EOR
projects still amounting to over 500 million cubic feet per day (MMcfd) or 10 million metric tons
(tonnes) per year comes from natural gas processing plants, ammonia plants, and one large coal
gasification facility (Table 1).
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Figure 1. Major CO2-EOR Activity in the U.S.
Source: Advanced Resources International, Inc., 2009
Table 1. Volumes of CO2 Supplying EOR Projects in 2008
State/Province(Storage location) Source Type (location)Natural Anthropogenic Natural Anthropogenic
Texas-Utah-NewMexico-Oklahoma
Geologic (Colorado-New Mexico)Gas Processing (Texas) 28 2 1,455 80
Colorado-Wyoming Gas Processing (Wyoming) 4 230Mississippi Geologic (Mississippi) 15 800
Oklahoma Fertilizer Plant (Oklahoma) 1 35Michigan Gas Processing (Michigan)
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currently injects 2.4 million tonnes of CO 2 per year, and plans to store 23 million tonnes, to support its
CO2-EOR operations. With continued CO 2 injection after EOR operations have ceased, the ultimate
expectation is to store 55 million tonnes of CO 2.2 Substantial additional CO 2-EOR and associated CO 2
storage potential also exists in Apaches nearby Midale field.
The steady growth of CO 2 flooding in the Permian Basin, as well as in other areas, offers a case history
for possible extrapolation to other regions. A review of the history of CO 2-EOR shows that it is
generally successful in fields that meet the technical criteria for achieving miscibility (defined primarily
in terms of reservoir depth and oil viscosity), that have a relatively large volume of unrecovered oil after
primary and secondary recovery (water flooding), and where there is a good source of sufficient,
predictable, sustainable volumes of high purity CO 2 supplies at affordable costs. Over time, other
factors that contribute to success are operator knowledge, comfort and willingness to use CO 2-EOR
technologies; the willingness and ability of the applicable regulatory regime to permit CO2-EOR
projects, and the availability of government financial incentives to promote CO 2-EOR.
In the past, CO 2-EOR project failures have generally resulted from either collapses in oil prices, such
as was the case in 1986 and 1998, or the unwillingness of companies to see the projects through.
CO2-EOR requires large up-front investments and is relatively slow in yielding financial returns on
those investments. As a result, internal rates of return are traditionally not robust. The advantage of
CO2-EOR is that it has lower risks than exploration projects, can be deployed faster if the infrastructure
is in place, and that large reserves associated with its application can be booked. Most oil companies
are exploration-oriented and can be misled by the unrisked rates of return present in exploration
projects. Historically, some companies have set unreasonable expectations on CO 2-EOR projects
and, when these projects, in their view, underperformed, management made the decision to cut losses
and abandon CO 2 injection. As a result, in some cases, the potential for CO 2-EOR was not realized in
practice by those companies, whereas companies that acquired those fields managed to secure
profitable operation in the long run.
POTENTIAL DOMESTIC OIL RESOURCES FROM CO 2-EOR
In January 2009, the U.S. Department of Energy, National Energy Technology Laboratory published a
report that quantified the potential benefits of integrating CO 2 storage with next generation CO 2-EOR
technology. 3 This work built upon previous analyses of currently practiced, or best practices CO 2-
EOR technology, in Storing CO 2 with Enhanced Oil Recovery 4 and a series of Ten Basin-Oriented
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Reports 5. The 2009 report involved individually assessing over 2,000 large oil reservoirs in eleven
U.S. oil basins/areas, 7 of which, over 1,100 were amenable to the application of CO 2-EOR.
Considerable evolution has occurred in the design and implementation of CO 2-EOR technology since it
was first introduced. Notable changes include: (1) use of much larger (up to 1.0 hydrocarbon porevolume (HCPV)) volumes of CO 2; (2) incorporation of tapered water alternating with gas (WAG) and
other methods for mobility control; and (3) application of advanced well drilling and completion
strategies to better contact previously bypassed oil. As a result, the oil recovery efficiencies of todays
better designed best practices CO 2 -EOR projects have steadily improved. In this report, we assumed
that such best practices were applied at a minimum to all prospective CO 2-EOR projects. Specifically,
best practices in this assessment, assumes State-of-the-Art technology characteristics used in
previous DOE/NETL studies. These represent the practices used by the most sophisticated operators
today, which are much improved over the CO2-EOR practices traditionally used by many operators.
Two key assumptions underlie the oil recovery performance estimated for best practices CO 2-EOR:
The injection of much larger volumes of CO 2 (1.0 HCPV), rather than the smaller (0.4
HCPV) volumes used in the past;
Rigorous CO 2-EOR monitoring, management and, where required, remediation activities
that help assure that the larger volumes of injected CO 2 contact more of the reservoirs
pore volume and residual oil rather than merely channel through high permeability
streaks in the reservoir.
In addition to these two central assumptions, the estimated oil recovery under the best practices
scenario also assumes appropriate well spacing (including the drilling of new infill wells), the use of a
tapered WAG process, the maintenance of minimum miscibility pressure (MMP) throughout the
reservoir, and the reinjection of CO 2 produced with oil.
Next Generation CO 2-EOR technology, in this assessment, again assumes technology
characteristics used in previous DOE/NETL studies. Specifically, it assumes:
Innovative flood design and well placement by adding horizontal production wells and vertical CO 2
injection wells, enabling CO 2 to contact residual oil from poorly swept portions of the reservoir
7 These 2,000+ large oil reservoirs account for 73% of the total U.S. oil endowment (original oil in-place).
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Viscosity and miscibility enhancement by adding mobility control with viscosity enhancers and
lowering MMP with miscibility enhancers
Increased volumes of CO 2 injection, assuming the injection of up to 1.5 HCPV of CO 2 (compared to
1.0 HCPV under best practices)
Flood performance diagnostics and control through the use of instrumented observation wells,
downhole sensors to monitor progress, periodic 4-D seismic, and pressure plus zone-by-zone flow
tests (among others) to manage and control the CO 2 flood. ). (See Reference 3).
Because the deployment of next generation technologies is more costly than that for best practices,
it is not the economically preferred option in some settings.
Of the estimated 596 billion barrels of U.S. oil endowment (expressed as original volumes of oil in
place, or OOIP), about two-thirds (395 billion barrels) is favorable for CO 2-EOR. Application of bestpractices CO 2-EOR would enable over 72 billion barrels to be technically recoverable in the Lower 48.
At oil prices of $70 per barrel and CO 2 costs of $15 per tonne, over 38 billion barrels would be
economically recoverable. 8 This is in addition to the estimated 2.3 billion barrels already being
developed with CO 2-EOR in the U.S.
The use of next generation technology would add to these totals. Specifically, the application of this
technology would provide over 106 billion barrels of technically recoverable domestic oil in the lower 48
(nearly 50% more than can be accomplished with current best practices for CO 2-EOR) (Table 2).
About 70% of this technical potential exists in just four regions (California, Mid-Continent, Permian
Basin, and East/Central Texas). Of this technically recoverable resource, over 57 billion barrels would
be economically recoverable at these oil prices and CO 2 costs. (For purposes of this assessment, the
CO 2 -EOR potential in Alaska was not included.)
8 The two primary factors that influence the economic viability of a CO 2-EOR project is the price of oil andthe delivered cost of CO 2; thus the focus on these two factors. While average rates of return for the oilindustry tend to average much lower, in practice, a 25% ROR hurdle rate was assumed in thisassessment to represent the increased risks associated with the application of CO 2-EOR, especially forthose operators not familiar with the technology.
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Table 2. Economically Recoverable Domestic Oil Resources from CO2-EOR*
Incremental TechnicallyRecoverable Oil*(Billion Barrels)
Incremental EconomicallyRecoverable Oil** (Billion
Barrels)
RegionBest
PracticesNext
GenerationBest
PracticesNext
Generation
California 6.3 10.0 5.5 7.8
Gulf Coast (AL, FL, MS, LA) 7.0 7.4 2.3 2.3
Mid-Continent (OK, AR, KS, NE) 10.6 17.0 5.6 8.7
Illinois/Michigan 1.2 3.2 0.5 1.7
Permian (W TX, NM) 15.9 28.0 9.4 15.0
Rockies (CO,UT,WY) 3.9 7.1 2.2 4.3
Texas, East/Central 17.6 20.0 8.4 12.1
Williston (MT, ND, SD) 2.5 5.2 0.5 0.5
Appalachia (WV, OH, KY, PA) 1.6 2.6 0.1 0.1
Louisiana Offshore 5.8 5.8 3.9 3.9
Lower 48 72.4 106.3 38.5 56.5
Alaska 12.4 12.4 9.5 9.5
TOTAL 84.8 118.7 48.0 66.0*Incremental technically recoverable oil resources after subtracting 2.3 billion barrels already being developed with CO2-EOR.**Assumes an oil price of $70 per barrel (constant, real) and a CO2 cost of $15 per metric ton ($0.79/Mcf), delivered at pressure to the field; and a 25%investment hurdle rate of return
Table 3 provides a region-by-region tabulation of the volumes of CO 2 that would be needed to supply
both best practices and next generation CO 2-EOR projects, assuming a $70 per barrel oil price and
$15 per tonne CO 2 cost (delivered at pressure), excluding CO 2 demand from projects already
underway. Under the best practices case, overall incremental demand in the Lower 48 for CO 2 in the
best practices case is estimated to be 9.8 billion tonnes. Under next generation technology case,
overall demand in the Lower 48 for CO 2 increases to 11.5 billion tonnes.
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Table 3. Economically Feasible Market for CO2 for Next Generation CO2-EOR*Gross Market for CO2(million metric tons)
Net New Market for CO2(million metric tons)
RegionBest
Practices
Next
Generation
CO2 AlreadyScheduled tobe Injected
(million metric
tons)
Best
Practices
Next
GenerationCalifornia 1,410 1,459 - 1,410 1,459
Gulf Coast (AL, FL, MS, LA) 721 721 250 471 471
Mid-Continent(OK, AR, KS, NE) 1,439 1,778 20 1,419 1,758
Illinois/Michigan 122 365 - 122 365
Permian (W TX, NM) 2,877 3,648 570 2,307 3,078
Rockies (CO,UT,WY) 568 809 74 494 735 Texas, East/Central 1,997 2,182 - 1,997 2,182
Williston (MT, ND, SD) 125 92 - 125 92
Appalachia (WV, OH, KY, PA) 41 18 - 41 18
Louisiana Offshore 1,386 1,386 - 1,386 1,386
Lower 48 10,687 12,456 914 9,773 11,542
Alaska 2,094 2,094 - 2,094 2,094
TOTAL 12,781 14,550 914 11,867 13,636*Assumes oil price of $70 per barrel; CO 2 cost of $15 per metric ton; and a 25% investment hurdle rate of return
Important to note in Table 3 that only a small portion (914 million tonnes) of the potential demand for
CO2 in CO 2-EOR projects will be met by existing CO2 supplies currently serving this market.
Moreover, if oil prices rise above $70 per barrel and/or if CO 2 costs drop below $15 per tonne, greater
economic potential for CO 2-EOR exists. Likewise, if oil prices drop below $70 per barrel, and/or if CO 2
costs are greater than $15 per tonne, there would be less economic potential for CO 2-EOR.
Based on this characterization of economic potential for CO 2-EOR, it takes, on average, approximately
0.28 tonnes of CO 2 per incremental barrel produced for CO 2-EOR under the best practices scenario,
and 0.22 tonnes of CO 2 per incremental barrel produced under the next generation technologies
case.
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DISTRIBUTION OF ECONOMIC CO 2-EOR PROSPECTS
Within each region of the country, the majority of the economic CO 2-EOR potential generally exists in a
relatively small share of the economic prospects. For example, as shown in Figure 2 for the Permian
Basin of West Texas, of the 7.1 billion barrels of economic resource potential, consisting of 92
economic prospects (at an oil price of $70 per barrel), 70% of the economic resource potential exists in
25 economic prospects with 625 million barrels or more of original oil in place.
Figure 2. Distribution of Oil Production Potential by Field Size
Permian Basin Field Distribution
0
100
200
300
400
500
600
700
800
900
1 11 21 31 41 51 61 71 81 91
Number of Fields
M M B b l s
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% o f T o t a l
Cumulative Basin Economic Recovery Field Economic Recovery
70
Source: U.S. Department of Energy/National Energy Technology Laboratory
However, the nature of this distribution varies from region to region, as shown in Table 4 for the
onshore regions of the U.S. For example, in Appalachia 70% of the economic resource potential exists
in just 2 prospects (out of 6 total economic prospects) with a field size greater than 150 million barrels
of original oil in place. In California, 70% of the resource potential exists in 17 large prospects, out of
75, with a field size of over 830 million barrels of original oil in place. In the region with the largest
potential, East and Central Texas, of the 8.3 billion barrels of economic resource potential, consisting
of 125 economic prospects, 70% of the resource potential exists in 21 prospects larger than 305 million
barrels of original oil in place.
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Table 4. Cumulative Probability Distribution for Onshore Economic CO2-EOR Prospects
# % of Total # % of TotalCalifornia 830 17 23% 58 77%Gulf Coast (AL, FL, MS, LA) 149 26 34% 50 66%Mid Continent (OK, AR, KS, NE) 289 21 29% 51 71%Illinois/Michigan 77 9 20% 35 80%Permian (W TX, NM) 625 25 27% 67 73%Rockies (CO, UT, WY) 135 21 30% 49 70%Texas (East/Central) 305 21 17% 104 83%Williston (MT, ND, SD) 96 9 41% 13 59%Appalachia (WV, OH, KY) 150 2 33% 4 67%Average 295 151 26% 431 74%
CO2EOR Field Cumulative Probability Distribution
Fields > Field Size Cutoff
Fields < Field Size Cutoff Region
Field Size Cutoff for 70% of Economic
Potential (MMBbls)
Source: U.S. Department of Energy/National Energy Technology Laboratory
Based on this, regions like Illinois/Michigan, with a small field size cut-off, would probably not be an
attractive destination for a large scale CO 2 pipeline project, but may lend themselves to a local network
of sources and sinks.
Thus, in the Lower-48 overall, 70% of the economic resource potential exists in 151 economic
prospects (at an oil price of $70 per barrel), or 26% of the 582 economic prospects at these conditions
(out of the over 1,100 prospects that are technically amenable to CO 2-EOR).
The importance of the characterization of this distribution is that, in the initial stages of growth of the
CO2-EOR/CCS market, these largest CO 2-EOR prospects will serve as the anchors for the
establishment of CO 2 transport and storage infrastructure in the various basin regions. Once
infrastructure is established around these anchor prospects, the development of the smaller
prospects can subsequently occur more economically, adding both to the oil production and economic
storage potential achieved within the region.
However, it is important to recognize that for a single large coal-fired electric power production facility,
producing 5 to 8 million tonnes of CO 2 per year for as long as 50 years, a single CO 2-EOR prospect will
generally not be sufficiently large to store all of the CO 2 emissions from the plant. However, a
hydrocarbon basin, in general, will be able to accommodate, in aggregate, the output of a number of
plants. Thus, given the nature of the field size distribution in a basin described above, in most cases,
several CO 2 -EOR prospects will often need to be pooled together to accommodate the produced CO 2.
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The largest fields will serve as anchors, with the smaller fields coming on line over time as the initial
costs of CO 2 capture and transport infrastructure are covered.
LIMITS TO AND PLANNED EXPANSION OF CO 2-EOR IN THE U.S.
The single largest barrier to expanding CO 2 flooding today is the lack of substantial volumes of reliable
and affordable CO 2. The establishment of CO 2 sources and the resulting growth of CO 2 flooding in the
Permian Basin, Wyoming, and Mississippi provide three independent case histories as testament to
this observation. Today, all three areas are constrained by CO 2 supply, and CO 2 production from
current supply sources is fully committed.
For example, after nearly a decade where CO 2 supplies in the Permian Basin outpaced demand in
CO2-EOR projects, since 2004 there has been a shortfall of CO 2 supply (Figure 3). Similarly, in other
regions of the U.S. where CO 2 activity is currently taking place, most CO 2-EOR operators believe thatthe relatively scarce availability of CO 2 limits industrys ability to greatly expand the application of CO 2-
EOR.
Some companies are taking steps to address, at least to some extent, this limitation. For example, in
the Permian Basin:
Kinder Morgan completed its Doe Canyon natural gas processing plant in southwestern
Colorado in early 2008, adding 3.5 million tonnes per year of CO 2 supply availability to
the Permian Basin. In addition, McElmo Dome has added another 3.5 million tonnes peryear of CO 2 production capacity.
Enhanced Oil Resources Inc. (EOR Inc.) announced a memorandum of understanding
(MOU) for developing a pipeline with SunCoast Energy Corp. to transport 6 million
tonnes per year of CO 2 nearly 350 miles from its St. Johns, Arizona helium and CO 2 field
to the Permian Basin. 6
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In June 2008, SandRidge Energy announced their agreement with Occidental to build a
CO 2 treatment plant and associated CO 2 compression and pipeline facilities at the
companys natural gas processing operations in Pecos and Terrell Counties in Texas,
providing Occidental with a dedicated CO 2 stream for CO 2-EOR. The plant could ramp
up to 8 million tonnes per year of CO 2.7
Figure 3. CO2 Supply and Demand in the Permian Basin
Similarly, in Wyoming, Anadarko has plans to extend to the Linch-Sussex area its 125 mile pipeline
that currently transports CO 2 to the Salt Creek and Monell fields. The ExxonMobil La Barge gas plant is
the source for this CO 2.8 ExxonMobil is spending $70 million to expand the plant's capacity to capture
CO2 by 50%. Currently, its capacity is about 4 million tonnes of CO 2 per year; the plants expansion,
scheduled to be completed in 2010, will augment this volume to 6 million tonnes per year. 9 In July,
2009, Encore Acquisition Company announced that it would buy approximately one million tonnes per
year (50 MMcfd) of CO 2 from the Lost Cabin Gas Plant for use in a CO 2-EOR project in the Bell CreekField. 10 Several other projects are being considered that could further expand CO 2 supply in the
region. 11
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Denbury Resources is going beyond just incremental increases in capacity by taking a long-term
strategic approach to expanding CO 2-EOR development, and in supplying the CO 2 to facilitate this
development, in Mississippi, Louisiana, and the Texas Gulf Coast. 12 Denbury plans to strategically
expand its existing infrastructure to bring additional CO 2, captured from anthropogenic sources, to the
CO2-EOR market that already exists. The company has signed CO 2 purchase contracts with threeplanned chemical plants for a portion of their anthropogenic CO 2 supplies, 13 and is actively pursuing
additional anthropogenic sources of CO 2 in the region to supplement its natural reserves (Figure 4);
supplies which are projected to begin declining around 2015. In addition, the company has identified
seven potential anthropogenic sources that could provide 30 to 36 million tonnes per year of CO 2
starting in 2013-2014.
Denbury also has plans to increase its CO 2 pipeline capacity, adding a CO 2 pipeline transporting CO 2
into East Texas. The approximately 510 kilometer (320 mile) Green Pipeline is designed to transport
13 million tonnes per year (800 MMcfd) of both natural and anthropogenic CO 2.
Figure 4. U.S Gulf Coast Potential Anthropogenic Sources of CO2
Source: Denbury Resources Inc., June 2009 Corporate Presentation
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But Denbury is also looking at bigger plans for moving CO 2 from areas where there are high
concentrations of emissions, to areas where there is large potential for CO 2-EOR. In July 2009, the
company announced that it has initiated a comprehensive feasibility study, in collaboration with the
Illinois Department of Commerce and Economic Opportunity, of a possible long-term CO 2 pipelineproject which would connect proposed gasification plants in the Midwest to its existing CO 2 pipeline
infrastructure in Mississippi and/or Louisiana (Figure 5). 14 The feasibility study of the Midwest Green
Pipeline is expected to determine the most likely pipeline route, the estimated costs of constructing
such a pipeline, and review regulatory, legal and permitting requirements. Denburys preliminary
estimates suggest this would be a 500 to 700 mile pipeline system, with a preliminary cost estimate of
approximately $1.0 billion. In addition to the feasibility study, Denbury has entered into contingent CO 2
purchase contracts with four planned Midwest facilities that would provide large volumes of captured
CO2.15
Figure 5. Denbury Resources Strategic Vision for Moving Midwest CO2 Supplies to the U.S.Gulf Coast CO2-EOR Market
Source: Denbury Resources Inc., 2009
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After this investment, further expanding CO 2 transportation capacity into East Texas and Oklahoma is
also conceivable.
The bottom line is that, without substantial expansion of CO 2 supplies to serve CO 2-EOR projects in
the U.S., expansion of domestic oil production from the application of CO 2-EOR will be limited.Moreover, given the current reserves and production of CO 2 from natural sources, significant
expansion of supplies from these sources of CO 2 is also limited. Consequently, if substantial
expansion in CO 2-EOR is to occur, additional CO 2 supplies will have to come from anthropogenic
sources.
POTENTIAL FOR CCS AND CO 2-EOR BY INDUSTRIAL EMISSIONSSOURCES
As described above, given the constraints on expansion of CO 2-EOR because of the scarcity of current
natural sources of CO 2, expansion of production from CO 2-EOR will need to use CO 2 from
anthropogenic sources, principally industrial facilities and power plants. Although this analysis focuses
mainly on CCS adoption within the U.S. electric power sector, the influence of hundreds of industrial
(non-power) CO 2 emission point sources needs to be considered as well.
These include a number of high purity CO 2 sources -- ammonia/fertilizer plants, ethanol and ethylene
oxide plants, hydrogen plants, and natural gas processing plants -- which have lower capture costs
than power plants and, consequently, could adopt CCS before such technologies begin to deploy
broadly within the electric power sector. These high concentration CO 2 sources are some of the most
likely earlier sources for expanded application for CO 2-EOR, even in the absence of enabling
legislation like ACES. More than 500 of these types of industrial sources of CO 2 emissions exist in the
U.S. Depending upon the portion of refinery emissions included, these sources can produce from 170
to 370 million tonnes of CO 2 per year, with perhaps a best estimate, including only CO 2 emissions from
H2 production at oil refineries, of about 200 million tonnes of CO 2 per year. 16
In addition, energy intensive industries such as steel and cement production have significant potential
for carbon capture, which could add an additional 90 million tonnes of CO 2 per year. Some of theseindustrial applications of carbon capture are capital intensive and would require state and federal
incentives to be economic, even with potential revenue from selling captured CO 2 to EOR operations.
In ACES, fifteen percent ($20-30 billion) of the incentive pool for CCS is reserved for a range of
different industrial applications, which could support significant deployment on hundreds of additional
sources.
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Assuming the average value of CO 2 utilization for CO 2-EOR of 0.26 tonnes of CO 2 per incremental
barrel produced, 9 the CO 2 produced from these industrial facilities could facilitate CO 2-EOR production
of on the order of 2.1 million barrels per day assuming CO 2 utilization of 200 million tonnes per year. 10
As discussed above, current sources of CO 2 for CO 2-EOR (both natural and anthropogenic) supportproduction of over 250,000 barrels of oil per day. These sources, along with the planned expansions of
CO2 supply and transport capacity also discussed above, could support additional CO 2-EOR
production for some time. Conservatively, assuming that about 300,000 barrels per day can be
produced using CO 2 from these (predominately) natural sources, and that CO 2-EOR production ramps
up uniformly over 18 years (from 2012 to 2030), 6 to 7 billion barrels of incremental oil could be
produced using captured CO 2 from industrial sources, assuming all of this CO 2 is utilized for CO 2 -EOR .
This ranges from 16% to 18% of the economic Lower-48 oil production potential assuming best
practices CO2-EOR technology. This would result in 1.6 to 1.8 billion tonnes of stored CO
2from high
value industrial sources by 2030. Therefore, substantial CO 2-EOR oil production potential (along with
the associated CO 2 storage potential) remains that could be the target for CO 2 captured via the
application of CCS technologies for power plants.
9 This is based on the combination of an average value of 0.28 tonnes of CO 2 per incremental barrelproduced for best practices technology and a 0.22 tonnes of CO 2 per incremental barrel produced fornext generation technology.10 For comparison, the latest forecasts for oil production for CO 2-EOR by the EIA, based on runs ofNEMS, not counting that which would be attributable to natural sources of CO 2, range from 0.6 to 0.8million barrels per day by 2030, depending on the scenario, without consideration of the potentialcontributions from CCS incentives. If CO 2-EOR production utilizing CO 2 from natural sources is included,forecast oil production from CO 2-EOR in the EIA forecasts ranges from 1.3 to 1.5 million barrels per day.
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FORECASTS OF POWER SECTOR CCS DEPLOYMENT FROMIMPLEMENTATION OF ACES
In this assessment, forecasts of the potential oil production from CO 2-EOR were based on
assessments by EIA and NRDC on the energy and economic impacts of implementing ACES. 17
Included in these forecasts are estimates of deployment for coal and natural gas-fired power
generation with CCS, assuming the legislation is enacted and signed more or less in the form passed
by the House.
Two separate forecasts were developed by NRDC in September 2009, using two models: the National
Energy Modeling System (NEMS) 18 and MARKAL (acronym for MARKet ALlocation). 19
NEMS is a forecasting model that is used by EIA to develop its annual long-term
projections for energy supply, demand, and prices. It uses observed historical behavior
in order to estimate how individual market participants will act going forward in response
to changing market conditions and imposed constraints. NEMS results are presented on
an annual basis through 2030.
MARKAL is a long-term cost-optimization model with assumed perfect foresight that
aims to minimize total societal costs through 2050 given imposed constraints. Originally
developed by the International Energy Agency, MARKAL illustrates what could happen if
all market participants had perfect information and behaved rationally. MARKAL results
are presented in 5-year increments through 2050.
In the modeling runs based on both NEMS and MARKAL, NRDC used EIAs March 2009 Annual
Energy Outlook (AEO) as its business-as-usual (BAU) reference case, with some modifications to
reflect the extended renewable tax credits specified in the American Recovery and Reinvestment Act
of 2009. 20 The April AEO 2009 updated release included changes to reflect stimulus bill provisions, as
well as an updated economic forecast (reflecting the growing recession) and updated world oil prices.
The following provisions from ACES were reflected in the NEMS- and MARKAL-based assessments
performed by NRDC:
Declining emission limits
Renewable electricity standards
Carbon capture and storage incentives
Energy efficiency provisions
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Vehicle efficiency standards
With regard to the assumed policy framework in ACES, the following policy and financial incentives
relevant to CCS were addressed in these runs:
A declining cap on 85% of U.S. emission sources of 17% below 2005 levels by 2020,
increasing to 83% by 2050; oil and (residential and commercial) gas emissions are
capped upstream at the refinery and distribution level, respectively;
An initial allocation of 35% of emission allowances to electric and gas utilities, 9% to
states and 15% to trade-exposed industries, transitioning to a full auction by 2036;
A price floor for carbon allowances of $10/ton that increases 5% per year, and an
allowance reserve to auction additional allowances in response to unexpected surges in
allowance prices;
Assumption that EPA establishes a comprehensive regulatory framework for CCS;
A $10 billion demonstration program funded by a small wires charge on existing fossil
generation;
Allocation of 5% of the allowances to a commercial deployment program, 85% of which
is for power plants and a maximum of 15% for industrial sources, with a total CCS
capacity deployment of up to the equivalent of 72 gigawatts (GW) of coal-fired power
plants. For power plants, the incentive starts at $90 per tone and transitions to a reverseauction or reverts to a fixed-value incentive that declines with installed capacity; and,
An emission performance standard on all new coal plants built after 2009 that will likely
require CCS for compliance.
In this analysis, forecasts of potential oil production and associated CO 2 stored (annual and
cumulative) from the application of CO 2-EOR were based on forecasts of CCS deployment projections
from the NRDC assessments (using NEMS and MARKAL 11) of the economic and energy implications
of implementing ACES. Similarly, Advanced Resources produced a forecast based upon the recentcomparable assessment of ACES by EIA. 21 Figure 6 shows the range of modeled volumes of CO 2
captured in the power sector for geologic sequestration predicted in several forecasts.
11 Advanced Resources also supplied CO 2 _EOR oil supply curves as a function of oil price and CO 2 costfor incorporation into the MARKAL runs to simulate CO 2-EOR deployment due to CCS.
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Figure 6. Carbon Dioxide Captured from Electrici ty Generation Technologies with CCS in 2020and 2030
In the NEMS model runs by NRDC, ACES is forecast to stimulate 14 GW of coal fired power
generation capacity with CCS by 2020, and 109 GW by 2030 (the last year of the forecast in NEMS).
This would result in the annual storage of 78 million tonnes by 2020, and 530 million tonnes by 2030.
In the NEMS model runs by EIA, ACES is forecast to stimulate 13 GW of coal fired power generation
capacity with CCS by 2020, and 69 GW by 2030. This results in the annual storage of 85 million
tonnes by 2020, and 409 million tonnes by 2030.
In the MARKAL model runs, ACES is forecast to stimulate 17 GW of coal fired power generation
capacity with CCS by 2020, 40 GW by 2030, and 201 GW by 2050. This would result in the annual
storage of 124 million tonnes by 2020, 243 million tonnes by 2030, and 1,170 million tonnes by 2050.
These results are summarized in Table 5.
0
100
200
300
400
500
600
EPA: IGEM EPA: ADAGE EIA: NEMS NRDC: NEMS-NRDC NRDC: MARKAL
M i l l i o n
T o n s
C O 2
2020 2030
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Table 5. Comparison of Forecasts of CCS Deployment and Associated Benefits due
2020 2025 2030Estimated Cum
by 2030 2035 2040Coal with CCS Deployment - Capacity (GW)NRDC - MARKAL 16.9 36.9 39.8 87 138NRDC - NEMS 13.6 45.6 108.8
EIA - NEMS 13.1 31.4 68.9
Coal with CCS Deployment - CO 2 Stored (million tonnes) (Gt)NRDC - MARKAL 124 226 243 2.4 521 809NRDC - NEMS 78 224 530 1.6EIA - NEMS 85 190 409 1.5
Incremental Oil Prod. from CO 2 Stored with CCS from Power Plants (MMBpd)* (Billion Barrels)NRDC - MARKAL*** 1.3 2.4 2.6 9 2.6 2.6NRDC - NEMS 0.3 1.4 3.6 6EIA - NEMS 0.4 1.3 3.0 6
* Assumes all CO 2 from CCS is stored in oil fields with EOR potential at a rate of 0.26 tonnes of stored CO 2 per barrel of oil.** Assumes a price for captured CO 2 of $15/ton, which increases economic potential to between 38 billion barrels using best practices ageneration technologies at oil prices ranging from $70 and $100 per barrel.
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NATIONAL FORECASTS OF OIL PRODUCTION FROM CO 2-EORRESULTING FROM PROJECTED CCS DEPLOYMENT UNDER ACES
Also shown in Table 5 are estimates of the potential domestic crude oil production that could be
realized if all of the CO 2 captured from the power plants with CCS was injected into fields with oil
production potential from CO 2 -EOR . 12 It is important to realize that it is unlikely that all captured CO 2
from CCS deployment will be used for EOR; some power plants may instead choose to sequester the
captured CO 2 in deep saline formations instead, despite the economic advantages of CCS with CO 2-
EOR. Our estimates therefore represent a maximum potential in that respect.
The estimates in this characterization were developed based on the previously discussed assumption
that it takes 0.26 tonnes of CO 2 to produce an incremental barrel of oil from CO 2-EOR. Given this, and
the amount of CO 2 forecast to be captured annually from power plants deploying CCS, estimates of
incremental oil production from CO 2-EOR were developed, assuming all of the captured CO 2 is storedin oil fields with economic CO 2-EOR potential. To estimate annual and daily production rates, each
years new CO 2 supplies from CCS deployment are assumed to go to new floods and stay with them
through a five year ramp up, to a peak production plateau for five years, after which that stream of CO 2
supply backs off over 5 years and goes to new floods (i.e. it is added as new CO 2 in the year it
becomes available). Also, EOR production is assumed to start the year following the start of injection
of new CO 2 from the CCS projects.
Given the range of forecasts of CCS deployment in Table 5, the CO 2 captured from CCS deployment
could stimulate from 2.6 to 3.6 million barrels per day of incremental domestic oil production from CO 2-
EOR by 2030. By 2030, from 6 to 9 billion barrels of incremental oil could be produced domestically as
a result of using CO 2 captured from power plants. Combined with the 6 to 7 billion barrels of
incremental oil could be produced using CO 2 from industrial sources, this represents from 32% to 39%
of the economic Lower-48 oil production potential assuming best practices CO 2-EOR technology, and
from 21% to 27% of the potential assuming next generation CO 2-EOR technology.
Specifically:
In the NEMS model runs by NRDC, ACES is forecast to result in volumes of captured CO 2
sufficient to stimulate 0.3 million barrels per day of incremental oil production from CO 2-EOR
by 2020, and as much as 3.6 million barrels per day by 2030. Cumulatively, if all this CO2
12 This is not necessarily what is expected to take place as a result of the ACES.
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were utilized for EOR, this could result in approximately 6 billion barrels of incremental oil
production by 2030.
In comparison, based on the EIA model runs, ACES could stimulate 0.4 million barrels per
day of CO 2-EOR production by 2020, and 3.0 million barrels per day by 2030, again totaling
approximately 6 billion barrels of incremental oil production by 2030.
Finally, based on the NRDC model runs using MARKAL, which shows higher CCS
deployment in the near term than NEMS, ACES would stimulate 1.3 million barrels per day
of incremental CO 2-EOR production by 2020, and 2.6 million barrels per day by 2030.
Cumulatively, this would result in approximately 9 billion barrels by 2030. 13
As the volume of captured CO 2 from CCS continues to increase after 2030, rising to more than one
billion tons per year by 2050 based on forecasts from MARKAL produced by NRDC, substantially more
oil production from CO 2-EOR could be achieved. While not all of the captured CO 2 is likely to be
stored in oil fields with CO 2-EOR potential, Advanced Resources previous assessment of CO 2 storage
indicate that there could be significant additional economic potential for CCS and EOR in U.S. oil fields
as CO 2 infrastructure develops for capturing and transporting large volumes of CO 2 within and between
oil producing regions. Moreover, as strategies evolve for optimizing CO 2 storage capacity as well as
additional oil recovery potential, substantial additional volumes of CO 2 could be stored in fields targeted
for CO 2-EOR.
The NRDC MARKAL model run, in which CO 2-EOR potential is limited to economic best practicesand next generation techniques, forecasts that about 4.8 million barrels per day could be attributable
to incremental oil production from CO 2-EOR by 2050. The MARKAL model forecasts that 37 billion
barrels of additional crude oil could be produced by 2050, most of which is produced through best
practices as MARKAL forecasts oil prices to stay below $90 per barrel for the majority of the policy
period (2010-2050). Up until 2030, MARKAL predicts that the value-added features of using the
captured CO 2 for CO 2-EOR would result in most of the captured CO 2 from the forecast deployment of
power generation with CCS being utilized for this purpose.
Finally, substantial additional oil production potential could be realized as CO 2-EOR technologies
advance, as oil prices continue to rise, and delivered CO 2 costs continue to drop (as competition for
storing CO 2 puts additional pressure on industrial facilities to deliver CO 2 to CO 2-EOR projects at lower
13 Due to longer 5-year timeframes used in MARKAL, the overall average oil production rate was used toestimate oil production.
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costs to ensure delivery), and as (discussed in more detail below) additional oil production potential is
realized from the application of CO 2-EOR technologies to the essentially immobile residual oil
transition/residual oil zone (TZ/ROZ) underlying the main oil pay zone in some basins. As there is
insufficient characterization of this ROZ, the stranded oil potential for recovery was not included in our
modeling of technical and economic CO 2-EOR potential and would be an additional opportunity forexpanded CO 2-EOR production as CO 2 supplies develop and saturate EOR markets.
To provide some perspective as to the importance of this incremental oil production, in 2008, on
average, the U.S. imported about 9.75 million barrels per day, and produced about 5 million barrels per
day, Figure 7. At this rate, given these estimates of the potential production from CO 2-EOR in 2030
using captured CO 2 emissions from both the power plants deployed with CCS and high-quality CO 2
captured from industrial sources, this represents the potential for substantially reducing U.S. oil
imports.14
Figure 7. Comparison of Potential Oil Production from CO2-EOR due to CCS Deployment to2008 U.S. Oil Production and Imports
1.3
2.4 2.6
0.3
1.40.4
33.6
1.3
0
2
4
6
8
10
12
NRDC - MARKAL
NRDC - NEMS
EIA - NEMS
4.96
9.75
0.25
0
2
4
6
8
10
12
U.S. OilProduction
U.S. Net OilImports
M i l l i o n
B a r r e
l s p e r
D a y
2020 2025 2030
Maximum Oil Production Potential fromCO2 Stored with CCS in CO2-EOR
Current EORProduction
2008 Production and Imports
JAF028163.PPTJAF028163.PPT
M i l l i o n
B a r r e
l s p e r
D a y
JAF2010_001.XLS
14 NRDC also estimates that passage of ACES will also result in substantial reductions in the U.S.demand for oil, further reducing oil imports.
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An important question that should be addressed relates to the feasibility of achieving this potential
increase (over 12 fold) in oil production from CO 2-EOR by 2030. As shown in Table 3, 38.5 billion
barrels are estimated to be economically recoverable in the Lower 48 assuming best practices
technology. Assuming that this resource potential gets developed and fully converted into reservesover a 20 year time period, and assuming that these reserves are produced at an eight-to-one
reserves-to-production ratio (the historical ratio in the U.S.), this corresponds to oil production rates
from CO 2-EOR consistent with those forecast and summarized in Figure 8 and Table 5. Similarly,
assuming 56.5 billion barrels are economically recoverable in the Lower 48 under next generation
technology, converting this resource potential into reserves over a 30 year time period, at the same
eight-to-one reserves-to-production ratio, corresponds to oil production from CO 2-EOR consistent with
those forecasts.
The steady growth of CO 2 flooding in the Permian Basin and the other regions of the U.S., as shown in
Figure 8, offers one case history for possible extrapolation to the future. Between 1988 and 2008, oil
production from CO 2-EOR grew five-fold in the U.S. overall, while the growth in several of the individual
regions grew even more, approaching levels comparable to the future potential production that could
be achieved as the result of wide-scale CCS deployment. This occurred over a period where oil prices
were much lower, in real terms, than is forecast over the next twenty years; and where the delivered
costs of CO 2 were much higher than is forecast for the future if CCS results in ample supplies.
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Figure 8. Growth of CO2-EOR Production in the U.S. (1986-2008)
0
50,000
100,000
150,000
200,000
250,000
300,000
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Year
E n
h a n c e
d O i l R e c o v e r y
( b a r r e
l s / d a y
)
GULF COAST/OTHER
MID-CONTINENT
ROCKY MOUNTAINSPERMIA N BASIN
JAF2008008.XLS
Source: Advanced Re sources I ntl. a nd Oil and Gas Journal, 200 8. JAF02768.PPT
As perhaps another perspective on comparable growth in U.S. production, between 1989 and 2001,
U.S. coal bed methane (CBM) gas production increased from less than 100 billion cubic feet (Bcf) per
year to over 1,500 Bcf per year, a 15 fold increase, or an average annual growth rate of over 23%.
The forecast increase in oil production from CCS deployment in CO 2-EOR corresponds to a 12.25%
annual growth rate over the 2008 to 2030 time period. Also, for reasons described below, in many
ways CBM development is more resource- and time-intensive than CO 2-EOR, since CBM
development, unlike CO 2-EOR, generally takes place in areas without as much established oil and gas
industry infrastructure.
A recent study has shown that the average annual decline rate for the worlds giant oil fields is roughly
6.5%, or about half of the forecast increase in CO 2-EOR production discussed in this white paper. 22 As
more giant fields go into decline in the future, the average decline rates for these fields are expected to
increase. Moreover, smaller fields often have larger decline rates than the worlds giant fields. Thus, at
least in part, increases in oil production from CO 2-EOR, which will use much of the same infrastructure
currently used by oil production facilities, and will offset declines in oil production that would otherwise
occur from U.S. oil fields without the implementation of CO 2-EOR. This will allow production from CO 2-
EOR to use existing production facilities that would be otherwise substantially underutilized.
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Perhaps most importantly, CO 2-EOR produces incremental oil from fields that have already been
explored and developed, and are in production. The incremental investment associated with the
deployment of CO 2-EOR in these fields generally involves installing the additional equipment,
pipelines, and facilities necessary for CO 2 injection and recycling (converting production wells to
injection wells, constructing a CO 2 processing/recycling facility, installing the CO 2 transportation and in-field distribution and gathering system, and, in some cases, the drilling of some additional new wells to
reconfigure field development patterns to make them more appropriate for CO 2 flooding. These
investments, and the length of time associated with their implementation, are considerably smaller,
however, than that which would be associated with developing and producing comparable volumes of
oil from areas that are not currently under development. As a result, at least in theory, CO 2-EOR
production could ramp up at a rate much faster than most other types of energy resources, and with far
greater certainty about the magnitude of reserves.
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REGIONAL DISTRIBUTION IMPACTS OF CCS DEPLOYMENT OF CO 2-EOR POTENTIAL
Also important to consider is the regional distribution of CCS deployment, and the resulting benefits
from that deployment, due to implementation of ACES. Table 6 shows the forecast deployment of
power generation capacity with CCS in the NEMS runs by NRDC, by power market regions
represented in NEMS, for the years 2020, 2025, and 2030 (the NEMS Electricity Market Model Supply
Regions are shown in Figure 9). The greatest CCS-equipped capacity additions are forecast in the
regions associated with the Southeastern Electric Reliability Council (SERC), East Central Area
Reliability Coordination Agreement (ECAR), Mid-Atlantic Area Council (MAAC), and the Mid-America
Interconnected Network (MAIN). These four regions make up well over 70% of the CO 2 supply from
forecast CCS deployment.
Table 6. NEMS Forecasted Deployment of Power Generation Capacity with CCSCCS Capacity Deployed (GW)
NEMS PowerRegion 2020 2025 2030
1 ECAR (coal) 2.1 7.2 19.9ECAR (gas) 1.0 5.5 9.3
2 ERCOT (coal) 0.0 0.0 7.8ERCOT (gas) 0.0 0.0 1.2
3 MAAC 3.9 6.3 11.7
4 MAIN (coal) 0.0 0.0 2.9MAIN (gas) 0.0 1.2 6.8
5 MAPP 2.3 2.4 7.46 NPCC-NY 0.7 1.3 3.77 NPCC-NE 0.0 0.0 0.08 FRCC 1.0 1.0 1.09 SERC 2.6 19.4 26.2
10 SPP 0.0 1.2 7.011 WECC-NW 0.0 0.0 0.912 WECC-RM/SW 0.0 0.0 1.213 WECC-CA 0.0 0.1 2.0
TOTAL COAL CCS 12.6 38.8 91.6TOTAL GAS CCS 1.0 6.7 17.2TOTAL GW CCS 13.6 45.6 108.8
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Figure 9. NEMS Electricity Market Model Supply Regions
4
5
1
2
3
13
6
7
8
11
9
10
12
NEMS Electricity Market Model Supply RegionsJAF02059.CDR
1 East Central Area Reliability Coordination Agreement (ECAR)2 Electric Reliability Council of Texas (ERCOT)3 Mid-Atlantic Area Council (MAAC)4 Mid-America Interconnected Network (MAIN)5 Mid-Continent Area Power Pool (MAPP)6 New York (NPCC-NY)7 New England (NPCC-NE)8 Florida Reliability Coordinating Council (FRCC)9 Southeastern Electric Reliability Council (SERC)10 Southwest Power Pool (SPP)11 Northwest Power Pool (WECC-NW)12 Rocky Mountain Power Area (WECC-RM/SW)
13 California (WECC-CA)
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The NEMS model was developed by the EIA to assess market dynamics and policy impacts at the
power region level, which can be aggregated nationally. The model incorporates fuel availability and
costs, electricity supply and demand data to model optimal utility decisions by electric power region,
thereby providing market-based projections for new capacity additions, including CCS-equipped powerplants (for coal and natural gas units). At this time, the NEMS model does not include geological
information relevant to the siting of carbon sequestration plants, such as access to saline aquifers or oil
and gas reservoirs. As a result, NEMS may project more or less CCS deployment than if such data
were included. For example, less CCS deployment might be projected in the Mid-Atlantic region
(Region 3, see Figure 11), due to lack of available storage options in that region compared to the
Rocky Mountain Power Area (Region 12), which has access to both saline formations as well as active
CO2-EOR markets.
The estimates of captured CO 2 associated with this power generation capacity with CCS are
summarized by NEMS power market regions in Table 7. Similarly, estimates of maximum oil
production potential from CO 2-EOR utilizing captured CO 2 associated with power generation capacity
with CCS is shown in Table 8.
It is important to understand of the dynamic between regional CCS deployment in the power sector
and its ability to take advantage of the CO 2-EOR potential of various regions, since the areas of CCS
deployment do not overlap simply in the prospective regions of CO 2-EOR potential. Figure 10 overlays
the NEMS Electricity Market Model Regions with the major oil basins with CO 2-EOR potential.
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Table 7. Estimates of Captured CO2 Associated with Power Generation Capacity with CCSCaptured CO 2 from CCS (million
tonnes)NEMS Power
Region 2020 2025 2030 Cum (MMt)1 ECAR 15.6 53.0 129.9 6682 ERCOT 0.0 0.0 44.5 1113 MAAC 23.4 33.3 61.5 4384 MAIN 0.0 3.3 33.6 1005 MAPP 13.6 12.7 38.9 2296 NPCC-NY 3.9 6.7 19.7 1027 NPCC-NE 0.0 0.0 0.0 08 FRCC 5.9 5.2 5.2 699 SERC 15.7 102.1 138.2 935
10 SPP 0.0 6.1 37.0 12311 WECC-NW 0.0 0.0 4.6 1112 WECC-RM/SW 0.0 0.0 6.2 1613 WECC-CA 0.0 0.7 10.3 29
Total 78.2 223.1 529.6 2,830
COAL CCS SEQ 75.2 204.5 482.7GAS CCS SEQ 2.9 19.4 47.2
TOTAL CCS SEQ 78.1 223.9 529.9
Table 8. Estimates of Maximum Oil Production Potential from CO2-EOR Util izing Captured CO2 Associated with Power Generation Capacity with CCS
NEMS PowerRegion 2020 2025 2030
Cum (BillionBarrels)
1 ECAR 0.1 0.3 0.9 1.52 ERCOT 0.0 0.0 0.3 0.33 MACC 0.1 0.2 0.4 0.94 MAIN 0.0 0.0 0.2 0.25 MAPP 0.0 0.1 0.3 0.56 NPCC-NY 0.0 0.0 0.1 0.27 NPCC-NE 0.0 0.0 0.0 0.08 FRCC 0.0 0.0 0.0 0.19 SERC 0.1 0.6 0.9 2.110 SPP 0.0 0.0 0.2 0.311 W ECC-NW 0.0 0.0 0.0 0.012 W ECC-RM/SW 0.0 0.0 0.0 0.013 W ECC-CA 0.0 0.0 0.1 0.1
Total 0.3 1.4 3.6 6.2
* Assumes a ll stored CO 2 with CCS is in oil fields with EOR potential** Assumes 0.26 tonnes of CO 2 stored per incremental barrel produced
Potential CO 2-EOR Prod from CO 2Captured via CCS (MMB/day)
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Figure 10. NEMS Electricity Market Regions and Major Oil Basins with CO2-EOR Potential
The SERC Electricity Market Model Supply Region has the largest amount of CCS capacity deployed,
and thus the highest volumes of captured CO 2 that could be used for CO 2-EOR. Fortunately, the
SERC region also corresponds with a region with some of the largest potential for CO 2-EOR (the Gulf
Coast Region). By 2030 the SERC region is forecast to generate nearly 940 million tonnes of captured
CO2. The Gulf Coast Region, with 2.2 to 2.7 billon barrels of economic CO 2-EOR recovery potential,
would require 650 to 690 million tonnes to develop. Thus, from 250 to 290 million tones of excess
CO2 would be available for pursuing CO 2-EOR opportunities in other regions.
4
5
1
2
3
13
6
7
8
11
9
10
12
NEMS Electricity Market Model Supply Regions
JAF02059.CDR
Major Oil Basins with CO2-EOR Potential in the Lower 48
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ERCOT and SPP, with combined cumulative capture of 234 million tonnes, are near the large CO 2-
EOR potential in Texas, Oklahoma, and Kansas. The combined CO 2-EOR potential of these states is
estimated to be 21 to 34 billion barrels, requiring 5.5 to 7.0 billion tonnes of CO 2 to develop. 15 Clearly,
to develop all of the CO 2-EOR potential of this region, substantial CO 2 supplies from outside the region
would be needed.
MAPP, forecast to generate 229 million tonnes of captured CO 2 by2030, is coincident with the region
containing the Williston Basin, which has 0.5 to 0.6 billion barrels of CO 2-EOR potential. The Williston
Basin potential would require 120 to 130 million tonnes to develop; less than the forecast CO 2emissions captured. From 100 to 110 million tones of excess CO 2 could be available for CO 2-EOR
opportunities in other regions.
The next four largest supply regions in terms of forecast volumes of captured CO 2 from CCS (ECAR,
MAAC, and MAIN) exist in the Midwest and Northeast, which are not located near large CO 2-EOR
potential. Collectively, these three regions are forecast to produce over 1.3 billion tonnes of captured
CO2 by 2030. To develop the CO 2-EOR potential in the oil basins nearest to these regions (the regions
of Appalachia and Illinois/Michigan) would require only as much as about 350 million tonnes. Clearly,
most of the CO 2 volumes captured in this region would need to be transported elsewhere to facilitate
increased production from CO 2-EOR.
15 Volumes based on best practices and next generation technologies.
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